THE High Court in Bloemfontein has dismissed an application by construction firm Ntema Investments CC to be reinstated in a multi-million-rand housing project in the Free State province, ruling that the company’s joint venture agreement had lapsed when the provincial government terminated the contract.
The company had approached the court seeking an order compelling the Free State Department of Human Settlements to reinstate it in the construction of 2 614 housing units in Refengkgotso, a project awarded in 2017.
Judge Daffue found that the joint venture (JV) between Ntema Investments and Sedtrade (Pty) Ltd had ceased to exist after Sedtrade, the lead partner, agreed with the department to end the contract, citing financial unviability.
The department has since appointed a new contractor to complete the project.
“The JV agreement automatically lapsed when the contract with the department was cancelled,” the judge ruled, adding that Ntema Investments could not demand reinstatement given that a new contractor had already taken over the project.
The dispute arose after Ntema Investments discovered in November 2023 that a new contractor was working on-site.
The company argued that it had been unfairly excluded and sought damages or reinstatement.
However, the court found that the JV had long ceased functioning as a legal entity and that its business objectives were no longer achievable.
The ruling underscores the legal principle that a joint venture dissolves once its contractual purpose is no longer viable.
“Joint ventures are created for a specific business objective, and when that objective can no longer be pursued, the JV ceases to exist,” the judgment read.
The court also noted that Sedtrade had agreed with the department that the contract was not economically viable and had consented to its termination.
Furthermore, a previous order in January 2024 had already facilitated payment of R585 433.30 into the JV’s account, settling outstanding claims.
Ntema Investments’ application was dismissed with costs, including those of the department’s legal counsel.
The ruling clears the way for the Free State government’s continued efforts to complete the housing project, which has faced years of delays. – Staff Reporter